Correlation Between East Side and Manulife Financial

Can any of the company-specific risk be diversified away by investing in both East Side and Manulife Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining East Side and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between East Side Games and Manulife Financial Corp, you can compare the effects of market volatilities on East Side and Manulife Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in East Side with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Side and Manulife Financial.

Diversification Opportunities for East Side and Manulife Financial

-0.59

Correlation Coefficient

East Side  Manulife Financial

Excellent diversification

The 3 months correlation between East and Manulife is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games and Manulife Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial Corp and East Side is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on East Side Games are associated (or correlated) with Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial Corp has no effect on the direction of East Side i.e., East Side and Manulife Financial go up and down completely randomly.

Pair Corralation between East Side and Manulife Financial

Assuming the 90 days trading horizon East Side is expected to generate 4.91 times less return on investment than Manulife Financial. In addition to that, East Side is 4.08 times more volatile than Manulife Financial Corp. It trades about 0.0 of its total potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.07 per unit of volatility. If you would invest  1,227  in Manulife Financial Corp on October 27, 2024 and sell it today you would earn a total of  608.00  from holding Manulife Financial Corp or generate 49.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

East Side Games  vs.  Manulife Financial Corp

East Side Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Side Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Manulife Financial Corp

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Manulife Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with East Side and Manulife Financial

The main advantage of trading using opposite East Side and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Side position performs unexpectedly, Manulife Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Manulife Financial will offset losses from the drop in Manulife Financial's long position.

The idea behind East Side Games and Manulife Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.